Tax Exam 2 Questions with complete
solution
Explain the general organization of the federal court system for cases
concerning federal tax issues. - correct answer The Federal court system
consists of three trial level courts; the Tax Court, the District Courts, and the
U.S. Court of Federal Claims; and two levels of appellate courts; the U.S.
Courts of Appeals and the U.S. Supreme Court.
May a taxpayer take his or her tax case directly to the U.S. Supreme Court? -
correct answer No. An appeal from any of the three trial courts is to the U.S.
Courts of Appeals. Theparties do not have direct access to the Supreme
Court.
Who has the burden of proof in most cases involving the tax law? Why? -
correct answer As a general rule, for civil cases involving issues of the tax
law, the taxpayer has the burden of proof (the taxpayer is the petitioner).
However, per §7491, the burden of proof is shifted to the IRS with regard to
court proceedings against an individual for penalties or other additions to tax,
and in cases involving factual issues if the taxpayer introduces creditable
evidence, maintains records and substantiates items as required by the Code
and regs
(the above rules do not shift the burden to the IRS for corporations, trusts and
partnerships with net worth in excess of $7 million). The burden of proof is
always on the IRS in criminal tax cases.
The U.S. Tax Court is a national court that meets in Washington, D.C. Does
this mean that the taxpayerand his or her attorney must travel to Washington
to have a case heard? - correct answer No. Taxpayers need not travel to
Washington, D.C. because the Tax Court judges travel to various cities
, throughout the country and hear cases in these locations. In fact, the Tax
Court is available to hear taxpayer cases in major cities across the United
States several times each year.
May a taxpayer have a jury trial in the U.S. Tax Court? - correct answer No.
Taxpayers cannot request jury trials before the Tax Court. Jury trials are only
available in the District Courts.
Distinguish among a regular, memorandum, and summary decision of the Tax
Court. - correct answer A Regular decision generally involves a new or
unusual point of law, as determined by the Chief Judge of the Court.
If the Chief Judge believes that the decision concerns only the application of
existing law or an interpretation of factual questions, the decision is issued as
a Memorandum decision.
Summary decisions are issued in cases tried under the small case procedures
and have no precedential value
The U.S. Tax Court is a national court that hears cases of taxpayers who may
appeal to various geographical courts of appeals. How does the Tax Court
reconcile the opposite holdings of two or more of these courts of appeals for
taxpayers who work or reside in different parts of the country? - correct
answer When confronted with opposite holdings, the Tax Court will follow the
Court ofAppeals holding, if any, that has direct jurisdiction over the taxpayer
whose case is before the Tax Court (the Golden Rule).
If the Court of Appeals that has jurisdiction over the taxpayer has not ruled on
the matter, the Tax Court will decide the case based on its own interpretation
of the statute.
solution
Explain the general organization of the federal court system for cases
concerning federal tax issues. - correct answer The Federal court system
consists of three trial level courts; the Tax Court, the District Courts, and the
U.S. Court of Federal Claims; and two levels of appellate courts; the U.S.
Courts of Appeals and the U.S. Supreme Court.
May a taxpayer take his or her tax case directly to the U.S. Supreme Court? -
correct answer No. An appeal from any of the three trial courts is to the U.S.
Courts of Appeals. Theparties do not have direct access to the Supreme
Court.
Who has the burden of proof in most cases involving the tax law? Why? -
correct answer As a general rule, for civil cases involving issues of the tax
law, the taxpayer has the burden of proof (the taxpayer is the petitioner).
However, per §7491, the burden of proof is shifted to the IRS with regard to
court proceedings against an individual for penalties or other additions to tax,
and in cases involving factual issues if the taxpayer introduces creditable
evidence, maintains records and substantiates items as required by the Code
and regs
(the above rules do not shift the burden to the IRS for corporations, trusts and
partnerships with net worth in excess of $7 million). The burden of proof is
always on the IRS in criminal tax cases.
The U.S. Tax Court is a national court that meets in Washington, D.C. Does
this mean that the taxpayerand his or her attorney must travel to Washington
to have a case heard? - correct answer No. Taxpayers need not travel to
Washington, D.C. because the Tax Court judges travel to various cities
, throughout the country and hear cases in these locations. In fact, the Tax
Court is available to hear taxpayer cases in major cities across the United
States several times each year.
May a taxpayer have a jury trial in the U.S. Tax Court? - correct answer No.
Taxpayers cannot request jury trials before the Tax Court. Jury trials are only
available in the District Courts.
Distinguish among a regular, memorandum, and summary decision of the Tax
Court. - correct answer A Regular decision generally involves a new or
unusual point of law, as determined by the Chief Judge of the Court.
If the Chief Judge believes that the decision concerns only the application of
existing law or an interpretation of factual questions, the decision is issued as
a Memorandum decision.
Summary decisions are issued in cases tried under the small case procedures
and have no precedential value
The U.S. Tax Court is a national court that hears cases of taxpayers who may
appeal to various geographical courts of appeals. How does the Tax Court
reconcile the opposite holdings of two or more of these courts of appeals for
taxpayers who work or reside in different parts of the country? - correct
answer When confronted with opposite holdings, the Tax Court will follow the
Court ofAppeals holding, if any, that has direct jurisdiction over the taxpayer
whose case is before the Tax Court (the Golden Rule).
If the Court of Appeals that has jurisdiction over the taxpayer has not ruled on
the matter, the Tax Court will decide the case based on its own interpretation
of the statute.
